TFPI (tissue factor pathway inhibitor) is an anticoagulant protein that prevents intravascular coagulation through inhibition of fXa (Factor Xa) and the TF (tissue factor)-fVIIa (Factor VIIa) complex. Localization of TFPI within caveolae enhances its anticoagulant activity. To define further how caveolae contribute to TFPI anticoagulant activity, CHO (Chinese-hamster ovary) cells were co-transfected with TF and membrane-associated TFPI targeted to either caveolae [TFPI-GPI (TFPI-glycosylphosphatidylinositol anchor chimaera)] or to bulk plasma membrane [TFPI-TM (TFPI-transmembrane anchor chimaera)]. Stable clones had equal expression of surface TF and TFPI. TX-114 cellular lysis confirmed localization of TFPI-GPI to detergent-insoluble membrane fractions, whereas TFPI-TM localized to the aqueous phase. TFPI-GPI and TFPI-TM were equally effective direct inhibitors of fXa in amidolytic assays. However, TFPI-GPI was a significantly better inhibitor of TF-fVIIa than TFPI-TM, as measured in both amidolytic and plasma-clotting assays. Disrupting caveolae by removing membrane cholesterol from EA.hy926 cells, which make TFPIα, CHO cells transfected with TFPIβ and HUVECs (human umbilical vein endothelial cells) did not affect their fXa inhibition, but significantly decreased their inhibition of TF-fVIIa. These studies confirm and quantify the enhanced anticoagulant activity of TFPI localized within caveolae, demonstrate that caveolae enhance the inhibitory activity of both TFPI isoforms and define the effect of caveolae as specifically enhancing the anti-TF activity of TFPI.